WEALTH HEALTH:Don't be misled by headlines

If the market is making your head swim, you may be able to solve the problem by turning off, tuning out and dropping out of the 24-hour news cycle.

That’s an odd suggestion coming from someone who works in the media, but what makes it doubly strange is that it’s prompted in part by the web site I trust like no other, MarketWatch.com. Beyond simply being my employer, I trust the site because I know personally the quality people and journalists my fellow staffers are.

But, last month, MarketWatch set a site record for the number of visitors to its news pages, which set me to wondering what kind of messages we were sending to both new and increasingly active visitors at a time when they were presumably drawn in looking for some measure of market guidance to calm their nerves or keep them on top of the financial news.

In my newspaper days, I would have gone through a stack of front pages and looked at headlines. In the Internet world with its 24-7 action, that doesn’t work, because a busy news site will change its front page multiple times over the course of a day, and there’s not necessarily a record of what the site looked like with each of those changes.

So I looked at “snapshots” of MarketWatch’s front page, one each day – just the top screen, always the first one available after 5 p.m. ET – just to see what titles would have captured the attention of an average investor seeking some guidance, perspective and outlook after the market had closed for the day.

Here were some of the highlights, in chronological order, from July :

‘This is not an average, typical or normal bull market’ [expert] says

If ever the stock market flashed a ‘sell’ signal, it’s now

[Expert]: U.S. stocks will be ‘very disappointing’ for 10 years

A stock correction is coming, then more years of gains; [expert]

[Expert] There’s a big hole in the bull case for stocks

We’re in the third biggest stock bubble in U.S. history

[Expert]: Great Crash of 2016, third $10 trillion loss this century

Buy-and-hold investing is impossible

Stock bubble is ‘beyond 1929 and 2007’: economist

Stock trader who called 3 crashes now sees a 20% collapse

Those are just some examples – one of them from my own column -- less than half of the investing-oriented headlines that caught my eye.

It’s no wonder after a barrage of headlines like that that the first monthly measure of investor sentiment released for August – the Investors’ Business Daily Economic Optimism Index – was down sharply.

But at a time when the round-the-clock news cycle and the easy access of social media makes it possible to not only read the stories but to feel like you can influence the news, it’s hard to believe there will ever be enough agreement between the bulls and bears to believe an overall sense of optimism.

They’re no more likely to get together and see the situation in a remotely similar way than impassioned Republicans and Democrats are to suddenly see key issues the same way, allowing for fast, easy progress.

Meanwhile, if this stuff confuses the general public, it enriches the sharpies on Wall Street.

Malcolm Polley, president of Stewart Capital Advisors and co-manager of Stewart Capital Mid-Cap, could not have been more blunt about how the headlines are helpful to the industry, even if all they do is confuse the public.

Chuck Jaffe is senior columnist for MarketWatch. He can be reached at cjaffe@marketwatch.com. CLICK to read more ofhis columns.
“To the extent that the news and information turns into crap – and that crap turns into volatility – that’s good for me,” he said. “For us, it’s information that creates a dramatic downward move in a price, where the information might be valid, or it might be misunderstood. … The knee-jerk reaction is ‘This looks bad, let’s get out,’ but that creates opportunities if you understand the situation, rather than just reacting to what you read or hear.

Moreover, the constant prognostications have made it so that everyone seems to think they can be a market weatherman, capable of spotting the next squall, shower or sunny day.

In short, reading the analysis and looking at the headlines is fine; it makes you a more informed investor.

Acting on it is where investors get themselves into trouble.

If you’ve been changing your actions based on the news, the headlines or the web sites you favor and it hasn’t been improving your investment results, it may be time to disconnect your portfolio from what you are reading and listening to.